Kinsteel files appeal against winding-up order

Posted on 30 January 2018

Source: The Edge

Kinsteel Bhd, which has been categorised as a Practice Note 17 (PN17) firm, is appealing against the court’s winding-up order against it.

In a filing with the stock exchange after the market close, the company said it submitted an appeal against the decision of the winding-up order by Messrs Chooi, Saw & Lim to the High Court in Kuantan on Jan 25.

To recap, in April 2016, Kinsteel, a steel manufacturer and miller, was served with a writ of summons and statement of claims filed by Knusford Marketing Sdn Bhd.

Knusford Marketing, which is a wholly-owned subsidiary of Knusford Bhd, had sued Kinsteel and its subsidiary Kin Kee Marketing Sdn Bhd for RM20.07 million plus interest and costs, for allegedly failing to deliver steel bars in the agreed quantity it had paid for.

On Jan 22, the High Court in Kuantan has made a winding-up order pursuant to the Section 218 of the Companies Act 1965 against Kinsteel and Kin Kee Marketing Sdn Bhd.

The company today said the appeal has been submitted and necessary announcements on further development of the winding-up order will be made in due course.

Kinsteel had been classified as a PN17 company since Oct 27, 2016 after its auditors expressed a disclaimer of opinion in its audited financial statements for the 2016 financial year (FY16), when its current liabilities exceeded current assets, while it continued to incur losses.

Its FY17 audit report, in which external auditor Messrs Crowe Horwath expressed disclaimer of opinion on the going concern for Kinsteel, which is undergoing a regularisation plan — including debt restructuring measures — is dependent on the support from its lenders and shareholders, combined with its ability to run a cashflow-healthy operation.

On Jan 9, the company appealed to Bursa Malaysia for the removal of its securities to be deferred, after it failed to submit its regularisation plan within the stipulated time frame, which was by Oct 26, 2017.

The counter last closed at 0.5 sen on Jan 4 before its suspension, for a market capitalisation of RM5.25 million.